The owner of Heart and Galaxy radio stations is mulling a formal bid for the radio assets of Guardian Media Group.
Chrysalis, owner of 100.7 Heart FM in the Midlands, yesterday confirmed preliminary talks had been held with its rival, which owns Jazz FM as well as the Guardian newspaper, but said a deal was not a foregone conclusion.
The London-based group issued a statement in response to press speculation that a bid of more than £115 million had been rejected by Guardian.
In addition to Jazz FM in London, Guardian owns Smooth FM which transmits in the North-west and operates regional radio stations under the Real Radio brand, broadcasting in South Wales, South and West Yorkshire and Central Scotland. Chrysalis, which is valued at £295 million by the market, owns Galaxybranded radio stations around the UK as well as Heart 106.2 and LBC.
Further consolidation of the radio industry has been expected in the City after GWR and Capital Radio agreed a £ 711 million merger in September.
Speculation is also rife that media giant Emap is poised to launch a takeover bid for Scottish Radio Holdings, in which it already owns nearly 30 per cent of shares.
Chrysalis said that the purchase of more radio assets formed part of its stated strategy but any deals needed to complement its existing radio business and boost shareholder value. Chrysalis has wrestled with a falling share of radio audiences in the past few months and volatile advertising markets.
Figures published by industry body Rajar in January led the company to predict that full-year radio revenues would be three per cent lower.
Chrysalis, which also has music publishing and books divisions, was founded by music industry stalwart Chris Wright.
Mr Wright still owns more than a quarter of the company but has seen the investment arm of fund manager Schroders raise its stake to more than 25 per cent last month.
This sparked speculation in the City that Chrysalis would have to do a deal or break itself up to generate value for its investors.